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Samsung will shut down its Slovak plant

South Korea’s Samsung will close down one of its two plants in Slovakia in the coming months, the Sme daily wrote on January 26. It's factory in Voderady will probably shut down in April. The company also manufactures displays in Galanta (both lie in Trnava Region).

“The company lacks production workers," the daily writes, adding that the Voderady plant has no longer received any state subsidies, so the South-Korean consumer electronics producer has no problem with shutting it down.

Production should be moved to Galanta. All of the 570 Voderady employees were offered positions there, too. The plant in Voderady has currently 568 core employees while 1,000 more are hired from external sources. This facility has an annual turnover of €63 million.

Relocation, cause and course

“I confirm the information about the production relocation related to the announced transfer of all permanent employees,” Galanta Mayor Peter Paška confirmed for Sme.

Mayor of Voderady, Pavol Augustín, has not been informed by the company yet.

“The company has decided to consolidate the factories in Voderady and Galanta with the objective to manage more efficiently the production process in Slovakia," explained Ján Nemašík, compliance manager at Samsung Electronics Slovakia, as quoted by Sme.

In its Slovak plants, the company has a production with low added value – in fact, the factories are assembly workshops. In Voderady, displays are produced and transported to Galanta where the monitors are then completed – around seven million devices a year. Thus, it is not profitable to increase salaries of the local workers, and Samsung is unable to lure new people.

Samsung officially informed on the shift of production and said that workers should be informed this week. The company failed, however, to answer further questions about details of the relocation.

It is not clear for now whether Serbs – who work in the hundreds now in the Voderady plant – will be relocated to Galanta, too. The company has received an exception from the Labour Ministry to hire foreigners outside the European Union member states, according to Sme.

It will be crucial for the company to not discriminate against Slovak workers during the “rationalisation” of its production, Labour Minister Ján Richter told Sme.

“For example, the employers should not be able to calculate and opt for foreigners, as they are satisfied with a lower salary, too,” Richter commented on the current situation in Samsung, as quoted by Sme. “I suppose they will not leave the country altogether but rather merge their plants.”

Further closures and relocation abroad possible

Until now, Slovakia has not been used to big companies leaving the country. On the contrary, it has rather been the country where companies tend to arrive.

"This trend is changing and firms may start leaving,” head of the Employment Institute, Michal Páleník, told Sme. “So far, we have been very lucky as the carmakers which impact many other industries and branches have been growing.”

Samsung is not the only company in Slovakia which is plagued by lack of workers and the constantly changing legislation as well as increasing costs of employment. Allegedly, some other companies are considering leaving, too. Specific information comes from German companies, spokesperson of the Slovak-German Chamber of Commerce Markus Halt said, as cited by the daily.

Especially in the western part of Slovakia, the lack of labour is palpable. Thus, the cabinet now tries to solve this issue with a law: an MPs’ proposal should enable companies to employ up to 30 percent of regular, core workers from third countries, (i.e. outside the EU) – from Serbia, Ukraine, Vietnam, etc., while also speeding up the administrative procedures for their employment.